The news of the layoffs came as the PC maker, which acquired fellow manufacturer eMachines in March in an effort to boost PC shipments, reported a preliminary loss of US$166 million, 49 cents per share, on revenue of US$868 million for the first quarter, which ended March 31.
The loss included a charge of US$104 million, or 31 cents per share, related to the closing of its chain of 188 retail outlets. Without the charge and a US$13 million tax benefit, Gateway would have posted a US$75 million loss--22 cents per share--for the quarter, the company said.
On average, 10 analysts surveyed by Thompson FirstCall had expected Gateway to report a loss of 20 cents per share. Revenue estimates of eight analysts polled by the firm averaged US$795 million.
During the same quarter one year ago, Gateway reported a US$200 million loss, equalling 62 cents per share, on revenue of US$844 million.
Gateway will use the layoffs and other cost-reduction efforts, such as streamlining some of its product lines, as a way to speed its path to profitability. It plans to return to profitability by 2005, it said in its earnings statement.
Gateway will also seek to lower its selling, general and administrative costs, which are mostly made up of salaries, to less than 10 percent of revenue, it said.
Going forward, Gateway said it expects second-quarter revenue of US$798 million and a loss of 15 cents per share before charges.
